Price has been dropping and August home sales should be out middle of next week. I had a good for 60-days order executed at Tuesday’s low so I’m not buying today. But I’ll be following the price on Monday in case it gets under $44. “Should” be a good sales number.
KC
Price has been dropping and August home sales should be out middle of next week. I had a good for 60-days order executed at Tuesday’s low so I’m not buying today. But I’ll be following the price on Monday in case it gets under $44. “Should” be a good sales number.
Buying opportunity? I think opportunities are relative. Relative to other places where your capital can be deployed. Coincidentally, I’ve been thinking about LGIH. Specifically, I’m thinking about what could move the stock higher before the next earnings release in November. There were concerns about LGIH in early 2017. Now those concerns have been dispelled and the stock has run up significantly. I think that while the monthly sales figures that are released during the first week of each month will likely surprise to the upside. However, I am skeptical that the stock will move significantly as a result. I think the stock will likely move together with the other homebuilders. At least until November (around November 8th) when LGIH will probably beat and raise again.
So today I sold some of my LGIH shares. I had a 9% position and now I have a 7.3% position. Where did I put that money? I added to my top 2 holdings: SHOP and NVDA.
I bought a little SHOP today at $104.94. The last 2 days SHOP has been up counter to the market and counter to tech. The volume today is already above the average volume and we are only halfway through the trading day. I’m not a big technical analysis guy but I think that maybe we will see a nice run in SHOP in the coming weeks. I also think that SHOP will have an excellent earnings result when they report in early November (around November 2nd). The key thing to watch, I think, will be how many new merchants they add in the 3rd quarter. There was a significant acceleration of merchant additions in Q2 and if this continues in Q3, look out, the shares could really rally. The shares I bought today are a trading position, and my decision to stay in will depend on SHOP’s stock price and some other stock prices move.
I also bought some more NVDA today at $167.00. I think this stock could also break out soon. I also think that the Q3 result will beat and beat across multiple business lines including data center, cryptocurrency, and gaming. I expect NVDA will report earnings around November 9th.
So I didn’t sell LGIH because I think it will do poorly. I sold and redeployed because I am making a bet that NVDA and SHOP stocks will outperform LGIH in the coming weeks. It is a bet based on how I see relatively between these particular stocks, and it may not turn out to be the right call. We will see…
Chris
Chris and all,
Buying opportunity? I think opportunities are relative. Relative to other places where your capital can be deployed.
Very true.
Your portfolio of 10 is based on fast growth and corresponding fast price appreciation. Now, I don’t practice portfolio construction and diversification, but I do have companies in my portfolio for various reasons. LGIH is my largest holding because “I think opportunities are relative”. LGIH is a company that I can study and understand close to 100%. It is houses, not nano-bots carrying genetically altered cells while transmitting data to the cloud via ultra short range signals to an chip embedded in the patient’s bicep. 
Buying LGIH at under $45 would be planned as a trading position for me. The last few days of weakness in LGIH are not reflected in the home builders index or similar home builder companies. I think there is 25% upside still by January to March time frame. That is based on my projected earnings and 10.5 trailing p/e, or 13 forward p/e if analysts and market are enthused.
BTW, my top holdings, descending order, are LGIH, SHOP, Casey’s General Stores, Hasbro, Facebook, MITK, NVDA, SQ, KITE, IPG Photonics, TLND. I also have a little BEAT and TWLO. That is basically 12 real positions plus a Phoenix 1 basket which I treat as a single holding since the FOOL does the research and DD. Casey’s is due a haircut. CASY and LGIH found their ways into my portfolio as macro based decision where I wanted some heartland America businesses amidst worries on international trade and China concerns. CASY is a long term growth story whereas LGIH has a 2-3 year shelf life in my opinion. Both with cyclical risks.
I have cash which is targeted to add to SHOP, NVDA and SQ and KITE. But only at one-month intervals. Takes me longer to build the portfolio than it takes LGIH to build a house.
So, not only are investing opportunities relative, but investing needs are relative. Building for retirement or retired. Portfolio $0.1 million or $1 million or $70 million? Living expenses $30,000, $100,000 or $300,000? But Chris is right. If one is investing for rapid portfolio growth, LGIH is not going to double from here the way SHOP, NVDA and SQ and KITE might. But if I see even 10% in 4 to 6 months with a company I understand, I’ll take it. It will help fund my 4% mandatory IRA withdrawal.
Cheers,
KC